The use of simulation to evaluate a multiechelon, dynamic inventory model

Abstract

AbstractSimulation is normally used to investigate a problem that is too complex for analytic: solution. However, it is possible to have a solution algorithm that is itself so complex that simulation may profitably be used to study its behavior. A case in hand is a recently developed multiechelon inventory decision model which uses dynamic programming techniques. The use of simulation to evaluate this decision model is illustrated by a case study of a fictitious but realistic item. In particular, its use for comparative analyses of different maintenance policies is explained.Additional uses of simulation in this context are mentioned. For example, the insertion into the simulation of complexities not included in the decision model provides a qualitative evaluation of the use of the decision model in an actual logistics system. Also, the ability of the decision model to cope with increasing information may be analyzed.